An Australian bishop told a special commission of inquiry into sexual abuse that he failed to familiarize himself with the personnel file of a serial pedophile priest "because the whole area of sexual abuse is so distasteful that I would have found it very unpalatable to dig further."

The inquiry has been asked to report on whether the Catholic church covered up abuse by two pedophile priests of the diocese of Maitland-Newcastle -- Denis McAlinden and James Fletcher -- or hindered police investigations.

McAlinden died in 2005 without being convicted. Fletcher died in jail in 2006.

During several weeks of public hearings, it seemed the inquiry, chaired by New South Wales Senior Deputy Crown Prosecutor Margaret Cunneen, would tackle little more than an internecine dispute within the state police department.

But the inquiry has suddenly burst into life. During three days in the witness box, Bishop Michael Malone, 73, who was bishop of Maitland-Newcastle from 1995 to 2011, said his handling of child abuse allegations in his early years as bishop was "fairly bumbling" and he regretted not acting with more determination. He is accused of lying under oath and tampering with his own record of a meeting with a Catholic school principal.

Malone said it had been a "complete shock" when he was appointed coadjutor -- or assistant bishop with right of succession -- to Maitland-Newcastle bishop Leo Clarke in November 1994. He said he was "still scratching my head" about why he was brought into the diocese as an outsider at a time when there appeared to be no issue with Clarke's health.

At the time, he said, he knew nothing about allegations of clergy pedophile activity in the diocese.

In December 1995, Clarke announced he was retiring. Days earlier, Fr. Vincent Ryan, was arrested and charged with sex abuse, the first of many priests of the diocese who would face allegations.

"The handover was no more than about five minutes, and he was out of there like a rocket," Malone told the inquiry. "I said, 'Aren't you going to show me where the skeletons are, the secret things are?' "

Malone said Clarke pointed to a briefcase in the corner of his office but otherwise refused to answer his questions. "I said, 'What's in the briefcase?' And he said, 'Oh, well, you'll find out.' "

Malone told the inquiry his first task as bishop was to write to McAlinden to say he intended to continue with a secret laicization process Clarke initiated a few weeks earlier. But McAlinden refused to cooperate, and the laicization was never completed.

During testimony July 10, Malone said when he wrote the letter to McAlinden in November 1995, he only knew about allegations concerning two of McAlinden's victims, known by the pseudonyms AL and AK. Malone told the inquiry that as the bishop of a busy diocese, he did not have the "luxury" to read through McAlinden's file and had known nothing of McAlinden's history of abuse before 1995 until recently.

However, under cross-examination, Malone said he looked into McAlinden's file "a little bit" and said he was familiar with details of McAlinden's earlier history of abuse, including the fact that he had been tried and acquitted in western Australia in 1992.

Malone also said he read a crucial 1976 document in McAlinden's file detailing his admission of his long-standing pedophile behavior. Malone said he did not pass on information about McAlinden's addresses in the United Kingdom and western Australia when police tried to track him down.

Malone also said in 2002, he tipped off Fletcher that he was under police investigation, but said he was not trying to thwart the investigation in doing so. Malone said the incident caused him to have an "epiphany" about his poor handling of abuse allegations.

Malone told the inquiry he met with the school principal at Branxton, near Newcastle, where Fletcher was a parish priest, on June 20, 2002. He said he warned the principal, Will Callinen, to be vigilant and not allow Fletcher access to children.

Callinen's counsel said his client did not meet with Malone that day. The counsel said Malone misled the special inquiry and doctored his personal diary to support his account of events, an allegation Malone denied.

Despite a police request that Fletcher should be removed from duties, Malone added the nearby parish of Lochinvar to Fletcher's responsibilities. He also did not warn the principals of two Lochinvar schools about Fletcher.

Julia Lonergan, the assisting council, asked Malone if it would have been better to appoint a priest to Lochinvar who hadn't been accused of sexually abusing boys. Malone said there had been no one else because of a shortage of priests:

Lonergan: "Nobody at all?"

Malone: "Nobody at all. That's what I'm saying, yes."

Lonergan: "So better to appoint a man accused of pedophilia than have no priest?"

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